A MoneyMail investigation has revealed banks and building societies are failing savers looking to boost their monthly income.
The investigation has unearthed that just a handful of the 250 cash ISAs available allow savers to take their interest monthly rather than just once a year.
Tax-free cash ISAs were introduced in 1999, and savers who have deposited their full entitlement each year, including reinvesting money from the savings from the previous tax-free savings schemes – have built up more than £50,000 in their accounts.
Though there are currently low interest rates, this could generate a decent monthly income for pensioners.
With a £50,000 cash ISA fund and a tax-free interest rate of 4% which is the best rate currently available on a cash ISA income would be boosted by £164-a-month.
However, most banks and building societies are neglectful and not helping pensioners turn their life-savings into income.
Save our Savers campaigner, Jason Riddle, says: “The ISA was once an excellent savings product, but low interest rates have combined with a dysfunctional market to undermine the tax-free benefits it was intended to deliver”.
The inability to draw a monthly income is just another example of how the product fails to meet the needs of today’s savers.
Mark Hoban, Financial secretary to the Treasury, said: “The main savings product the Government has in place is ISAs and more than 17m people now hold cash ISAs.
We want to make sure Isas are as simple, transparent, competitive and flexible as possible.
It is widely regarded that to make them truly flexible, more banks and building societies should offer regular income-seekers an option whereby their interest is more accessible more frequently.
Banks have also come under fire recently for failing to deal with those with PPI mis-selling claims.